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Aerie (AERI) Q3 Loss Wider Than Expected, Pipeline in Focus

Zacks Equity Research

Aerie Pharmaceuticals, Inc. AERI posted third-quarter 2017 loss of 71 cents per share (including stock-based compensation), wider than the Zacks Consensus Estimate of a loss of 62 cents and the year-ago loss of 67 cents.

Being a development-stage company, Aerie has not generated any revenues from product sales yet.



Aerie’s share price has increased 59.2% in the last six months as against the industry’s 2.7% decline. Last month, Aerie’s stock price has surged on positive news for its lead drug, Rhopressa.

Quarter in Detail

In the reported quarter, research and development expenses declined 2.2% to $12.4 million. General and administrative expenses surged 86.1% to $19.7 million. Higher operating expenses in the quarter were attributed to expansion of the employee base to support operations and commercialization preparatory activities, including commercial manufacturing costs for Rhopressa.

Aerie Pharmaceuticals, Inc. Price and Consensus


Aerie Pharmaceuticals, Inc. Price and Consensus | Aerie Pharmaceuticals, Inc. Quote


Pipeline Updates

Aerie resubmitted a new drug application (NDA) for lead candidate Rhopressa 0.02% in Feb 2017 and expects a review period of 12 months after withdrawing the NDA filed in September 2016 as a third party manufacturing facility in Tampa, FL was not ready for pre-approval inspection by the FDA. The company initiated preparations to bring a second contract manufacturer online in 2018.

On Oct 13, the Dermatologic and Ophthalmic Drugs Advisory Committee of the FDA voted in favor of Rhopressa’s approval. The members of the committee unanimously agreed that the trials support the efficacy of netarsudil ophthalmic solution for reducing elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension.

In addition, majority of the members agreed that the Rhopressa’s efficacy outweigh safety risks.

The FDA has set a Prescription Drug User Fee Act date of Feb 28, 2018. We note that the FDA is not bound by the Advisory Committee’s guidance but takes its advice into consideration when reviewing drugs.

Apart from Rhopressa, Aerie is evaluating Roclatan, a once-daily, quadruple-action fixed-dose combination of Rhopressa and Pfizer Inc.’s PFE Xalatan. The NDA for Roclatan is expected to be filed in second-quarter 2018.  The company also initiated Mercury 3 to support filings in Europe. The trial will be a non-inferiority trial comparing Roclatan to prescribed fixed dose combination of Ganfort (a combination of the bimatoprost along with timolol), marketed by Allergan plc AGN in Europe.

Our Take

The narrower-than-expected loss in the third quarter was encouraging. We are encouraged by the company's efforts in developing its pipeline candidates. A potential approval of Rhopressa in early 2018 will significantly boost growth prospects.

Zacks Rank & Key Pick                                                  

Aerie currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the health care sector worth considering is Exelixis, Inc. EXEL,carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Exelixis’ earnings per share estimates increased from 26 cents to 43 cents for 2017 and increased from 63 cents to 70 cents for 2018 over the last 30 days. The company delivered positive earnings surprise in the trailing four quarters with an average beat of 572.92%. The company’s shares have moved up 19.4% so far, this year.

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